Jordan Company currently is using a plant-wide factory overhead rate based on machine hours. The budgeted factory overhead costs is $405,000. Company has two departments, X and Y. Company is considering use of departmental overhead rates for the allocation of each departments’ overhead costs to jobs. Overhead would be applied based on direct labor cost in Department X and machine-hours in Department Y. The following additional information is available:
Budgeted Amounts Department X Department Y
Direct labor cost $180,000 $165,000
Factory overhead $225,000 $180,000
Machine-hours 51,000 mh 40,000 mh
Actual data for Job #10 Department X Department Y
Direct materials requisitioned $10,000 $16,000
Direct labor cost $11,000 $14,000
Machine-hours 5,000 mh 3,000 mh
1. Compute total cost of manufacturing Job 10 under current system (using plant-wide rate).
2. Compute total cost of manufacturing Job 10 using departmental overhead rates.
In: Accounting
On January 1, 2019, Calvert Company issues 10%, $200,000 face value bonds for $207,259.79, a price to yield 8%. The bonds mature on December 31, 2020. Interest is paid semiannually on June 30 and December 31.
Required:
1. | Prepare a bond interest expense and premium amortization schedule using the straight-line method. |
2. | Prepare a bond interest expense and premium amortization schedule using the effective interest method. |
3. | Prepare the journal entries to record the interest payments on June 30, 2019, and December 31, 2019, using both methods. |
In: Accounting
12. Bugs Bunny Ltd owns 92% of Road Runner Ltd. During 2019 Bugs Bunny Ltd sells inventory for $470,000 to Road Runner Ltd at a mark-up of 25% above cost. At the end of the financial year 50% of the inventory was unsold. What is the work paper journal entry to eliminate the effects of the intercompany sale?
please help
In: Accounting
How do you understand and interpret mean, median, mode, standard deviation, and variance?
In: Accounting
Pig and Whistle Company, a small company following ASPE, is adjusting and correcting its books at the end of 2017. In reviewing its records, it compiles the following information.
a) Pig and Whistle has failed to accrue sales commissions payable at the end of each of the last two years, as follows:
Dec. 31, 2017 |
$6,200 |
Dec. 31, 2018 |
$3,800 |
B) In reviewing the December 31, 2018 inventory, Pig and Whistle discovered errors in its inventory-taking procedures that have caused inventories for the last three years to be incorrect, as follows:
Dec. 31, 2016 |
Understated $21,000 |
Dec. 31, 2017 |
Understated $24,000 |
Dec. 31, 2018 |
Overstated $ 9,000 |
Pig and Whistle has already made an entry that recognized the incorrect December 31, 2018 inventory amount.
C) In 2018, Pig and Whistle changed the depreciation method on its office equipment from double-declining-balance to straight-line because of a change in the pattern of benefits received. The equipment had an original cost of $160,000 when purchased on January 1, 2016. At that time, it was estimated that the office equipment had an eightyear useful life and no residual value. Depreciation expense recorded prior to 2018 under the double-declining- balance method was $70,000. Pig and Whistle has already recorded 2018 depreciation expense of $22,500 using the double-declining-balance method.
D) Before 2018, Pig and Whistle accounted for its income from long-term construction contracts on the completed- contract basis because it was unable to reliably measure the degree of completion or the estimated costs to complete. Early in 2018, Pig and Whistle changed to the percentage-of-completion basis for financial accounting purposes. The change was a result of experience with the project and improved ability to estimate the costs to completion and therefore the percentage complete. The completed-contract method will continue to be used for tax purposes. Income for 2018 has been recorded using the percentage-of-completion method. The following information is available:
Pre-Tax Income |
||
Percentage-of-Completion |
Completed-Contract |
|
Prior to 2018 |
$195,000 |
$145,000 |
2018 |
75,000 |
30,000 |
Required:
1) Prepare the necessary journal entries at December 31, 2018 to record the above corrections and changes as appropriate. The books are still open for 2018. As Pig and Whistle has not yet recorded its 2018 income tax expense and payable amounts, tax effects for the current year may be ignored. Pig and Whistle’s income tax rate is 25%. Assume that Pig and Whistle applies the taxes payable method of accounting for income taxes.
In: Accounting
Hot Weelz Ltd., which began operations in January 2015, follows IFRS and is subject to a 30% income tax rate. In 2018, the following events took place:
a) The company switched from the zero-profit method to the percentage-of-completion method of accounting for its long-term construction projects. This change was a result of experience with the project and improved ability to estimate the costs to completion and therefore the percentage complete.
b) Due to a change in maintenance policy, the estimated useful life of Hot Weelz’s fleet of trucks was lengthened.
c) It was discovered that a machine with an original cost of $220,000, residual value of $30,000, and useful life of four years was expensed in error on January 23, 2017, when it was acquired. This situation was discovered after preparing the 2018 adjusting entries but before calculating income tax expense and closing the accounts. Hot Weelz uses straight-line depreciation and takes a full year of depreciation in the year of acquisition. The asset’s cost had been appropriately added to the capital cost allowance (CCA) class in 2017 before the CCA was calculated and claimed.
d) As a result of an inventory study early in 2018 after the accounts for 2017 had been closed, management decided that the weighted average cost formula would provide a more relevant presentation in the financial statements than the FIFO cost formula. In making the change to weighted average cost, Hot Weelz determined the following:
Date |
Inventory—FIFO Cost |
Inventory—Weighted Average Cost |
Dec. 31, 2017 |
$ 80,000 |
$ 65,000 |
Dec. 31, 2016 |
115,000 |
85,000 |
Dec. 31, 2015 |
180,000 |
135,000 |
Required:
1. Analyze each of the four 2018 events described above. For each event, identify the type of accounting change that has occurred, and indicate whether it should be accounted for with full retrospective application, partial retrospective application, or prospective application.
2. Prepare any necessary journal entries that would be recorded in 2018 to account for events C (ignore income tax considerations) and D.
In: Accounting
Terry Smith and two of his colleagues are considering opening a law office in a large metropolitan area that would make inexpensive legal services available to those who could not otherwise afford services. The intent is to provide easy access for their clients by having the office open 360 days per year, 16 hours each day from 7:00 a.m. to 11:00 p.m. The office would be staffed by a lawyer, paralegal, legal secretary, and clerk-receptionist for each of the two eight-hour shifts. In order to determine the feasibility of the project, Smith hired a marketing consultant to assist with market projections. The results of this study show that if the firm spends $1,025,000 on advertising the first year, the number of new clients expected each day will be 59. Smith and his associates believe this number is reasonable and are prepared to spend the $1,025,000 on advertising. Other pertinent information about the operation of the office follows: The only charge to each new client would be $69 for the initial consultation. All cases that warrant further legal work will be accepted on a contingency basis with the firm earning 30 percent of any favorable settlements or judgments. Smith estimates that 20 percent of new client consultations will result in favorable settlements or judgments averaging $4,900 each. It is not expected that there will be repeat clients during the first year of operations. The hourly wages of the staff are projected to be $59 for the lawyer, $49 for the paralegal, $39 for the legal secretary, and $29 for the clerk-receptionist. Fringe benefit expense will be 40 percent of the wages paid. A total of 580 hours of overtime is expected for the year; this will be divided equally between the legal secretary and the clerk-receptionist positions. Overtime will be paid at one and one-half times the regular wage, and the fringe benefit expense will apply to the full wage. Smith has located 6,000 square feet of suitable office space that rents for $65 per square foot annually. Associated expenses will be $58,500 for property insurance and $81,200 for utilities. It will be necessary for the group to purchase malpractice insurance, which is expected to cost $369,000 annually. The initial investment in the office equipment will be $129,000. This equipment has an estimated useful life of four years. The cost of office supplies has been estimated to be $10 per expected new client consultation. Required: Determine how many new clients must visit the law office being considered by Terry Smith and his colleagues in order for the venture to break even during its first year of operations. (Do not round intermediate calculations and round your final answer up to nearest whole number.) Compute the law firm’s safety margin.
In: Accounting
Jackson County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Jackson County area. Three services are provided for seniors—home nursing, Meals On Wheels, and housekeeping. Data on revenue and expenses for the past year follow: Total Home Nursing Meals On Wheels House- keeping Revenues $ 928,000 $ 266,000 $ 404,000 $ 258,000 Variable expenses 473,000 111,000 209,000 153,000 Contribution margin 455,000 155,000 195,000 105,000 Fixed expenses: Depreciation 69,500 8,600 40,500 20,400 Liability insurance 44,300 20,800 7,800 15,700 Program administrators’ salaries 115,500 40,700 38,500 36,300 General administrative overhead* 185,600 53,200 80,800 51,600 Total fixed expenses 414,900 123,300 167,600 124,000 Net operating income (loss) $ 40,100 $ 31,700 $ 27,400 $ (19,000) *Allocated on the basis of program revenues. The head administrator of Jackson County Senior Services, Judith Miyama, considers last year’s net operating income of $40,100 to be unsatisfactory; therefore, she is considering the possibility of discontinuing the housekeeping program. The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided. Required: 1-a. What is the financial advantage (disadvantage) of discontinuing the Housekeeping program? 1-b. Should the Housekeeping program be discontinued? 2-a. Prepare a properly formatted segmented income statement. 2-b. Would a segmented income statement format be more useful to management in assessing the long-run financial viability of the various services?
In: Accounting
ACCOUNT Work in Process—Baking Department | ACCOUNT NO. | ||||||||
Date | Item | Debit | Credit | Balance | |||||
Debit | Credit | ||||||||
Mar. | 1 | Bal., 4,800 units, 2/5 completed | 11,232 | ||||||
31 | Direct materials, 86,400 units | 172,800 | 184,032 | ||||||
31 | Direct labor | 50,600 | 234,632 | ||||||
31 | Factory overhead | 28,456 | 263,088 | ||||||
31 | Goods finished, 87,600 units | 253,944 | 9,144 | ||||||
31 | Bal. ? units, 3/5 completed | 9,144 |
|
The following information concerns production in the Baking Department for March. All direct materials are placed in process at the beginning of production.
a. Based on the above data, determine each cost listed below. Round "cost per equivalent unit" answers to the nearest cent.
1. Direct materials cost per equivalent unit. | $ |
2. Conversion cost per equivalent unit. | $ |
3. Cost of the beginning work in process completed during March. | $ |
4. Cost of units started and completed during March. | $ |
5. Cost of the ending work in process. | $ |
b. Assuming that the direct materials cost is the same for February and March, did the conversion cost per equivalent unit increase, decrease, or remain the same in March?
In: Accounting
In: Accounting
Question 4
Comparative financial statement data of Lannister Inc. are as follows:
Lannister Inc. |
||
Comparative Income Statement |
||
Years Ended December 31, 2016 and 2015 |
||
2016 |
2015 |
|
Net sales |
$687,000 |
$595,000 |
Cost of goods sold |
375,000 |
276,000 |
Gross profit |
312,000 |
319,000 |
Operating expenses |
129,000 |
142,000 |
Income from operations |
183,000 |
177,000 |
Interest expense |
37,000 |
45,000 |
Income before income tax |
146,000 |
132,000 |
Income tax expense |
36,000 |
51,000 |
Net income |
$110,000 |
$81,000 |
Lannister Inc. |
|||
Comparative Balance Sheet |
|||
December 31, 2016 and 2015 |
|||
2016 |
2015 |
2014 |
|
Current assets: |
|||
Cash |
$45,000 |
$49,000 |
|
Current receivables, net |
212,000 |
158,000 |
$200,000 |
Inventories |
297,000 |
281,000 |
181,000 |
Prepaid expenses |
4,000 |
29,000 |
|
Total current assets |
558,000 |
517,000 |
|
Property, plant and equipment, net |
285,000 |
277,000 |
|
Total assets |
$843,000 |
$794,000 |
$700,000 |
Accounts payable |
150,000 |
105,000 |
112,000 |
Other current liabilities |
135,000 |
188,000 |
|
Total current liabilities |
$285,000 |
$293,000 |
|
Long-term liabilities |
243,000 |
231,000 |
|
Total liabilities |
528,000 |
524,000 |
|
Common shareholders’ equity, no par |
315,000 |
270,000 |
199,000 |
Total liabilities and shareholders’ equity |
$843,000 |
$794,000 |
Other information:
Market price of Lannister common stock: $102.17 at December 31, 2016; and $77.01 at December 31, 2015.
Common shares outstanding: 18,000 during 2016 and 17,500 during 2015.
All sales on credit.
Compute the following ratios for 2016 and 2015
Current ratio
Quick ratio (acid test)
Receivables turnover and days’ sales outstanding (rounded to the nearest whole day)
Inventory turnover and days inventory outstanding (rounded to the nearest whole day)
Accounts payable turnover and days’ payable outstanding (rounded to the nearest whole day).
Cash conversion cycle (in days)
Times-interest-earned ratio
Return on assets (use DuPont analysis)
Return on common shareholders’ equity (use DuPont analysis)
Earnings per share of common stock
Price/earnings ratio.
Decide whether (a) Lannister’s financial position improved or deteriorated during 2016 and (b) the investment attractiveness of Lannister’s common stock appears to have increased or decreased.
In: Accounting
What are the theories in lobbying standard setting how to apply those theories?
In: Accounting
Eric, who is single with no dependents, has the following for the calendar year 2018:
RECEIPTS FOR YEAR
Salary as Walmart greeter $ 16,200
Interest from Friendly Bank 2,236
Interest from City of Chula Vista 2,000
Dividends from U.S. corporations 69
Social Security benefits 18,000
EXPENDITURES FOR YEAR
Contribution to IRA 920
Unreimbursed medical expense 1,200
Home mortgage interest 3,400
State income and property taxes 3,200
Charitable contributions of cash 5,400
Tax preparation fee 175
Eric claims two exemptions.
How much is Eric’s adjusted gross income?
Assuming your answer to “1” was $22,000, how much is Eric’s taxable income?
Based on your answer to “2”, how much is Eric’s federal income tax?
*SHOW WORK*
In: Accounting
What is the difference between refundable versus nonrefundable credits?
Name two or more refundable credits.
What are the Criterion of American Opportunity Credit and Lifetime Learning Credit?
In: Accounting
During 2018 and 2019, Kale Co. completed the following transactions relating to its bond issue. The company’s fiscal year ends on December 31.
2018
Mar. | 1 | Issued $350,000 of 10 year, 6 percent bonds for $341,000. The semiannual cash payment for interest is due on March 1 and September 1, beginning September 2018. | |
Sept. | 1 | Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest. | |
Dec. | 31 | Recognized accrued interest expense including the amortization of the discount. |
2019
Mar. | 1 | Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest. | |
Sept. | 1 | Recognized interest expense including the amortization of the discount and made the semiannual cash payment for interest. | |
Dec. | 31 | Recognized accrued interest expense including the amortization of the discount. |
Required
When the bonds were issued, was the market rate of interest more or less than the stated rate of interest? If the bonds had sold at face value, what amount of cash would Kale Co. have received?
Prepare the liabilities section of the balance sheet at December 31, 2018 and 2019.
Determine the amount of interest expense Kale would report on the income statements for 2018 and 2019.
Determine the amount of interest Kale would pay to the bondholders in 2018 and 2019.
In: Accounting